Global mining group Rio Tinto will ask the Takeover Panel to set a deadline for BHP Billiton to make a firm offer for the company - "to put up or shut up" - as speculation mounts that a third party may launch a rival takeover bid.

Rio has rejected an informal three-for-one share proposal from rival miner BHP, made at the beginning of November.

Since then, Marius Kloppers, BHP chief executive, has been talking to Rio and BHP shareholders, stressing the synergies that could be achieved if the two groups got together.

Most analysts have agreed that a lot of value could be realised from the merger. Kloppers has been sitting tight, intending to keep BHP's proposal at its current level and relying on shareholders to put pressure on Rio to come to the table.

But Rio has so far refused to engage in talks with BHP, saying the proposal undervalues the company. Tom Albanese, chief executive of Rio, said his company could deliver as much value for shareholders if it stayed independent. Last week, he said BHP's proposal was "dead in the water".

It is thought the Panel could come up with a deadline date by the end of the week - it would be expected to fall around mid-January. If it does decide to set a deadline, BHP will have to table a formal offer, or walk away and not come back with a takeover proposal for six months. If it made an offer, there would be a firm timetable that both companies would have to stick to.

Analysts said BHP would have to come back with a firm, higher offer, or one that includes a cash component, to get the approval of the Rio board. BHP is understood to be keen to agree a friendly merger, as a hostile bid will be complicated by Rio's dual-listed structure in the UK and Australia.

Rio's decision to call on BHP to put up or shut up has puzzled investors, who say that last week's discussions with the company indicated it would not involve the Takeover Panel. But it is understood that Rio is keen to achieve some certainty, as well as a higher offer.

Charles Kernot, an analyst at Seymour Pierce, said: "Maybe they are sensing that things have been going their way, and they just want to kick BHP Billiton into action." He added that it was possible that Rio Tinto might want to hurry BHP along because of other rumoured interests.

There has been considerable opposition to a potential merger from steelmakers around the world, who fear that it would create a near-monopoly in iron ore and push up prices.

The Chinese have been particularly vocal in their opposition and there has been speculation that some of the country's steelmakers and funds could get together to bid for Rio, or buy a blocking stake in the company.

Reports yesterday that Blackstone, the US private equity firm, was considering a break-up bid for Rio Tinto were denied.

But news that Baosteel, China's largest steelmaker, was to be suspended from the Shanghai Stock Exchange today has alerted the investment community.

Newspaper reports in the past few weeks have said Baosteel is considering a bid, although that has been denied by the company. Some industry observers are doubtful about China's ability to launch a bid for Rio Tinto, which would have to be valued at $150bn (£75bn) or more.

Baosteel has a market value of only about $40bn, and even if it managed to join forces with other companies and funds, such as CIC, China's sovereign fund, it would face the threat of protectionist moves from a number of other countries.

Australia's Foreign Investment Review Board, for example, blocked Shell's proposed takeover of Woodside Petroleum in 2001. Analysts say it could be even more active if the Chinese were involved, as it would mean a lot of Australia's mining assets would come under Chinese control.

Nevertheless, Sinosteel, another Chinese steel company, has made a $1.2bn offer for the Australian iron ore miner Midwest Corporation. Industry observers are watching this closely to see what the FIRB will decide.